SCHUMER: NEW DISTILLERIES ARE PLAYING A MAJOR ROLE IN BUFFALO'S TRANSFORMATION & POSITIONING WNY AS CENTER OF DISTILLING BOOM, BUT THEY DO NOT HAVE ACCESS TO THE MALT BARLEY THEY NEED DUE TO RISKS ASSOCIATED WITH GROWING THE CROP – SCHUMER LAUNCHES PUSH TO ESTABLISH ESSENTIAL CROP INSURANCE FOR WNY MALT BARLEY FARMERS
Insurance Currently Available to Farmers Growing Malt Barley In Other States, But Not NYS; Sec. of Agriculture Could Fix It Unilaterally, No Legislation Required – Schumer Calls on Feds to Prioritize & Fast-Track Vital Malt Barley Crop Insurance for NYS Farmers, Including Many in WNY; Crop Is Risky, But Absolutely Vital For Farm Brewers & Distillers
With 4 Distilleries Already Open In WNY & 3 More Set To Open in 2015, Region Is Becoming Major Hub For Farm Distilling – Due To NYS Law, Farm Distilleries Like Lockhouse Distillery and BFLO Distilling Co. Will Be Required To Source 75% of Ingredients From Local Farms & Malt Houses; In Order to Meet the Demand Created by both the Farm Distilling and Farm Brewery industry, Malt Barley Production Must Increase 15x
Schumer: Enabling Malt Barley Growth Is Key Ingredient To Success of WNY Distilleries
Today, at Lockhouse Distillery in Buffalo, U.S. Senator Charles E. Schumer launched his push to establish a crop insurance program for Western New York farmers who grow malt barley, a crop that is crucial to the continued growth of the Buffalo area’s burgeoning farm distilling industry, which is playing an important role in Buffalo’s transformation. Schumer explained that there currently is no federally-backed insurance coverage for malt barley in New York State, even though farmers in other states do have coverage, which severely hampers the ability of local farmers to grow the amount of malt barley needed to meet the demand of local distillers like Lockhouse Distillery and BFLO Distilling Co. Schumer noted that multiple farms in Western New York are already growing malt barley and providing it to a number of local distillers, but malt barley is sensitive to severe weather, which can completely knock out an entire crop. Therefore, Schumer urged the U.S. Department of Agriculture (USDA) to expand its malt barley crop insurance program to include New York State. Schumer said that with four distillers already open and operating in the Western New York area, and three more on the way, as well as an ever-growing farm brewing industry, it is essential to make sure the malt barley crop can thrive locally.
“Distilleries throughout Western New York are beginning to pour local products and jobs into our economy, which is why it is important that we continue to support this industry and provide them with the tools needed to grow and succeed. In order for local distillers and brewers to expand right here in Buffalo and Western New York, we need a strong local malt barley industry, since the crop is so important to production,” said Schumer. “But the lack of insurance for malt barley is preventing farmers from planting this crucial crop. Without protections, the risk is just too high, and that is preventing our craft distilleries from really taking off. In order to meet the demand of craft distillers and brewers, New York State will need to increase its malt barley production by 15 times, but malt barley farmers need crop insurance to meet that goal. That is why I am calling on the USDA to bring the national malt barley crop insurance program to New York State. It is already available in other states and for other types of barley; it is time to make it available here in order for our farmers, distillers, and brewers to really tap into their full potential."
Schumer explained that there is currently a need for increased malt barley production throughout New York State as a result of its burgeoning farm distilling and brewing industries. Alongside water, yeast, and hops, barley is one of the major components of beer and of many spirits produced by distilleries. Malt consists of barley that is germinated and then dried under highly controlled conditions. These conditions help to release the enzymes needed to convert the barley starches into sugars. These sugars are then fed to yeast through the process of fermentation, which ultimately creates the final product, alcohol. Schumer explained that Western New York farmers are beginning to grow this barley, which they then provide to malt houses. Malt houses then take the barley seed grains and put them through the process of malting; this is so the barley seeds can begin to germinate and thus convert the starches into sugars. Malt barley is then given to brewers and distillers who have the yeast and fermentation conditions needed to make beer and spirits.
Schumer noted that the farm distilling and beer industries have been growing throughout New York State over the past few years, and in Western New York, increasing the need for local ingredients, like hops and malt barley. The hops industry has already taken off, however hops, used in beer making, are needed in much smaller quantities than malt barley. As a result, Schumer explained, New York State will need more farmers to grow barley and more malt houses to convert that barley into malt if the suppliers are to keep up with the distilling industry needs.
Schumer said that this is especially important because, over the next decade, New York State is expected to require farm craft distillers to source 75 percent of ingredients from local farms and malt houses, and for farm craft brewers it will be 90%. Currently, 20 percent of all hops and 20 percent of all other ingredients, including malt barley, used by licensed New York Farm brewers are required to be grown or produced in New York State. According to the New York State Brewers Association, while only the breweries and distilleries licensed as Farm Brewery or Farm Distillery are required by law to meet the ingredient requirements, most non-farm craft distilleries and breweries are also increasing their sourcing from local areas, so the pressure is mounting to supply New York State grown ingredients in the coming years.
Right now, New York State has approximately 2,000 acres of malt barley, some of which is grown in Western New York. In Western New York, both Domoy Farms and CY Farms are growing barley in Genesee County, and would directly benefit from federally-backed crop insurance. NY Craft Malt is a malt house in the area, and Niagara Malt both grows and malts barley at their facility in Niagara County. According to data from Cornell Cooperative Extension, there are 13 Malt Houses either in operation or planning to open in New York as well as 39 farms engaged in growing malt barley, with an estimated 2,000 acres farmed in 2014. However, it is estimated malt barley production will have to grow fifteen-fold to 30,000 acres in the near term to meet the needs of New York State distillers and brewers, including many that have begun to take hold in Western New York. Schumer said that, with four distilleries already open in Western New York–including Lockhouse Distillery and Buffalo Distilling Co., and three more set to open in 2015, the region is starting to become a hub for farm distilling, and these new distilleries have the potential to be a major boon to the economy.
Because of this, Schumer said, New York State farmers will need to drastically increase their production of malt barley over the next decade. However, the lack of a federally backed crop insurance program is a barrier that is inhibiting farmers from producing the malt barley that is needed to support the burgeoning local distillery and craft beer industry. Without the assurance that the malt barley will be insured in the event of severe weather or a poor crop year, many farmers won't grow a risky crop for fear of taking a major loss without adequate coverage. The increased risk and cost scares off many potential growers. Schumer explained that while there is some insurance available to barley farmers, it is only available at the level of animal feed quality. However, the barley that is used to feed animals requires far fewer highly controlled conditions and it is two to three times cheaper to grow than the malt barley used to brew beer and make alcohol. Therefore, many farmers must choose between utilizing inadequate insurance that will not cover the full cost of their malt barley crop or simply forgoing coverage altogether. Schumer said this situation could be mitigated by providing these farmers with the USDA malt barley federal crop insurance that is offered to farmers in other states. Right now, the national malt barley crop insurance program, which has been available since the 2011 crop season, is not available in New York. Therefore Schumer is calling on the USDA to include New York State in this program and expeditiously approve its incorporation into the national program.
In order to begin this process of including New York in the USDA’s national malt barley insurance program, the federal agency would need to conduct surveys and inventories to gather information on the varieties of malt barley that are being grown and how the barley is graded; it would also need to assess the average malt barley pricing based on contracts farmers have with malt houses. Schumer is urging the USDA to come in right away and fast track the development of a malt barley insurance program for New York, because these farmers will need time to ramp up production and the malt houses they provide the crop to will need the time and financing to purchase the additional equipment needed to successfully produce at higher levels. This all must be done now rather than later, Schumer said, if Western New York and Upstate New York breweries and distilleries are to have the malt barley supply to fill their demand and the production needed to meet the local ingredient requirements.
Schumer was joined by Cory Muscato of Lockhouse Distillery; Robert Johnson of Niagara Malt; Andy Wgrzyn of Buffalo Distilling Company; Andrew Patterson of Queen City Malting; and Western New York farm distillers, brewers, malters, and farmers.
“As the industry grows, and as New York State requirements on farm distilleries and breweries increase, it is vital that we have a ready supply of malting barley available. Barley can be finicky, and so can our Western New York weather,” said Robert Johnson of Niagara Malt. “Senator Schumer has worked hard to support the craft brewing and distilling industry in New York, and we are grateful for his efforts to help NYS barley farmers access federal crop insurance, reducing our risk, and hopefully making more barley available for the entire industry.”
“Local distilleries are experiencing unprecedented growth in Western New York right now,” said Andy Wgrzyn of BFLO Distiling Co., a farm whiskey distiller, who will be opening a location in Larkinville this summer. “In order to take full advantage of the incentives New York State provides, however, we need a strong supply of New York grown barley. Currently, we have to buy much of our barley from out of state because there simply isn’t enough in New York. We appreciate Senator Schumer’s ongoing efforts to support farmers, as well as the distilling industry here in Western New York.”
“The craft industries are integrally tied to the land and if we wish to see the craft businesses of distilling, brewing and malting in New York succeed in making a truly New York State product, we first have to protect and encourage the farmers involved and make sure they are successful.” said Adam Patterson, Malter at Queen City Malting, which will begin operations in the Spring. “Senator Schumer’s efforts to reduce the risk to the farmers will be a boon to them, and we are thankful for his advocacy and continued support on behalf of this burgeoning industry.”
"By law, most New York State craft spirits producers rely on in-state farms to provide 75% of the raw materials that are required to produce their high quality and diverse craft spirits,” said Cory Muscato, Vice President of the New York State Distillers Guild and distillery manager at Lockhouse. “With the rapid growth our industry is experiencing, sourcing enough New York State raw materials to meet the high level of demand will be even more difficult in the coming years. Due to the importance of barley in many distilled spirits and the inherent high risk growing it presents to farmers, it is crucial that we push for barley crop insurance now to encourage farmers to grow enough to meet the increasing demand. The New York State Distillers Guild supports this important step towards growing the agricultural and infrastructure needs that will help to keep us at the forefront of the industry. I would like to thank Senator Schumer for his continued support and confidence."
A copy of Senator Schumer’s letter to the USDA appears below:
Dear USDA Secretary Vilsack and SBA Administrator Contreras-Sweet,
I write to bring your attention to help overcome several barriers that are now inhibiting the growth of a New York State malt barley industry including the current lack of a malt barley crop insurance program and a need to tap existing USDA and SBA financing programs to purchase equipment to scale up New York’s malt barley supply chain.
First there is a growing need for the United States Department of Agriculture (USDA) to provide a malt barley crop insurance program in New York State and I ask that USDA prioritize and expeditiously engage with the New York State malt barley industry for the creation of a barley crop insurance product specifically for Malt Barley. Additionally to help expedite this effort, I ask that the (National Agricultural Statistics Service) NASS begin surveys of New York malt barley production to aid the development of a first-ever insurance available to New York farmers.
Although USDA created a national malt barley crop insurance option beginning in the 2011 growing season and federally backed Malt Barley crop insurance options are available in other states, this option is not now offered in New York State in part because Malt Barley was not historically farmed in New York. However, the same factors that propelled New York State to become the nation’s third largest wine producing state over the past thirty years are now driving New York to become a leading producer of beer and craft distilling using New York farmed or produced ingredients such as malt barley.
Right now, according to data from Cornell Cooperative Extension, there are 13 Malt Houses either in operation or planning to open now in New York as well as 39 farms engaged in growing malt barley with an estimated 2000 acres farmed in 2014. However, it is estimated malt barley production will have to grow fifteen-fold to 30,000 acres in the near term to meet the needs of New York State brewers and distillers. In particular New York farm brewery licensed brewers will be required to source 60% of their ingredients from New York state farms or producers by 2018 and no less than 90% by 2024. Additionally this year New York state farm craft distillers are required to source 75% of their ingredients from New York farms or producers.
Currently the only barley insurance available in New York is for low-value livestock-feed grade barley, which is inadequate to insure the value of much costlier-to-produce high quality barley varieties used for malting. Thus, a true malt barley crop insurance product, like those offered in other states, is needed in New York to both help current growers manage their risk of growing higher value barley for malting and to remove a barrier that now discourages more farmers from planting malt barley. Additionally malt barley carries greater risks for loss and lower yields than barley grown for livestock feed because in order to be viable for malting, the grain must meet rigorous quality standards. Particularly in New York, which can endure both heavy rains and long dry spells, entire crops can be rendered unusable if malt barley becomes too moist and prematurely germinates in the field, or conversely dries out and is unable to germinate during the malting process.
Lastly, I ask the USDA and SBA to conduct outreach to the New York malt barley growers and producers to help them access existing financing programs that can help this burgeoning industry scale up and afford needed equipment and facilities that are now out of reach to today’s small but growing malt growers and producers. For example, there is need for more climate controlled on-site storage to store barley until it can be malted, as well as need for grain cleaning equipment, quality control testing facilities, and other capital needs.
I appreciate your consideration of this request that will help remove obstacles to scaling up New York’s malt barley supply chain while providing farmers with the opportunity to farm higher value-added malt barley.
Charles E. Schumer
United States Senator
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